Condo Conversions Continue Despite Low Vacancy Rate

Wednesday night, after over two hours of presentations and discussion, Regina Planning Commission decided to approve the application to convert the Viva Apartments on 2141 Rae Street into condominiums.

The recommendation for approval comes despite the fact that city staff drafted a strongly-worded report recommending denial; and despite the fact that city policy and provincial legislation indicate that conversions should be denied when the vacancy rate drops below 3% (as reported on this blog back on Dec 11, the present vacancy rate is 0.5%); and despite the fact that five tenants appeared before RPC to express their opposition to the conversion; and despite the fact that according to the city's survey of tenants, 64% of them are opposed to the conversion (when vacancy rates drop below 3%, city policy requires 75% of tenants be in agreement with an application); and despite the fact that two members of the Cathedral Area Community Association and one from the Regina Anti-Poverty Ministry appeared before RPC to oppose the conversion.

In short, the 2141 Rae application has failed every test put before it, official and unofficial, and yet the RPC has recommended approval.

The reasons for the approval? There seem to be two.

On one hand, it was pointed out that at the time the application was made (early last year) the vacancy rate for the central area was 3.5% (the citywide rate was around 1.5%). It was felt by some that because the 2141 Rae application has taken so long (this its third time before RPC) the applicant shouldn't be punished because of the delay and the older area rate should be used (and the older citywide rate ignored). This, of course, ignores the fact that the old area vacancy figure was based on October 2007 data which was already several months out of date at the time the application was made. Assuming the rate was dropping over that time (it had to have been to get from 3.5% to 0.5% in a year) then it's unlikely the actual vacancy rate for the central area was above 3% at that time.

The second reason cited was that the applicant -- DR Realty which is being represented by property manager, Nicor Developments -- is willing to let tenants who moved in before the application was submitted to stay for up to five years (or for life if the tenant is over 70 years old). Also, those tenants will have rent controls in place while they live there. RPC noted that if the conversion is not approved, the property owner will still go forward with renovations to the building but would be forced to finance those renovations by raising rents. Seeing as there are no rent controls in Saskatchewan, the applicant could simply price the apartments out of reach of the current tenants.

Sound to you like a case of a developer holding its tenants and the RPC hostage with threats of massive rent increases? Yeah, to me too.

After 2141 Rae, there are presently in the neighbourhood of 19 more condo conversion applications to be considered before Councillor Clipsham's conversion moratorium comes into effect. That means there are 500 more rental units that will likely be lost to the market and that's going to be a disaster for anyone who rents in this city --- not only will they find it hard to move if they have to, there's also the problem that, as anyone who has taken Econ 101 will tell you, constricting supply while there's an increase in demand is going to lead to a spike in rents.

When this was pointed out during the Wednesday meeting, RPC chair, Coucillor Fougere, remarked that each of the remaining applications will be judged on its own merits so no one should assume that all of the applications will be recommended for approval.

That's reassuring. Because clearly, considering all the opposition and all the factors working against it, if the RPC couldn't bring itself to say no to 2141 Rae, they'll definitely start rejecting applications any day now.

And, as if to put that to the test: shortly after the 2141 Rae conversion was approved, RPC voted to approve another condo conversion on 15 Coventry Road with hardly any debate whatsoever (and that despite the fact that city staff again recommended it be denied on account of the low vacancy rate).

Both the 2141 Rae and 15 Coventry Road conversions will go before city council on Monday January 26 for final approval.

Travel Advisory

As a favour to anyone who may be traveling in the New York area by air in the near future I'm posting this warning that Secretary Michael Chertoff [pictured] of U.S. Department of Homeland Security issued today.

Orange Alert: Recent information has reached this office that an insidious group of terrorists with roots in Canada have begun operating in the New York area. With ruthless efficiency, our sources inform us, they are targeting domestic flights taking off from La Guardia airport on suicide missions that pose tremendous risk to Americans. To combat this threat, our office will be pressing Congress to introduce heightened security measures at all border crossings with Canada, including the possible creation of a series of camoflaged outposts manned by drunken louts equipped with shot-guns. In the meantime, anyone with information on this terrorist cell, which is believed to be headed by an individual with the code name Branta Canadensis , is urged to contact Det. Andy Sipowicz of the New York Police Department immediately. God Bless America.